Northern Rock's new Granite 2006-1 issue is testing the waters for what pricing levels will look like early in the game and so far the reception has been encouraging. The deal was upsized yesterday by 50% to £6 billion ($10.6 billion) from £4 billion ($7.07 billion) with original price talk revised tighter. The most notable revision was at the triple-B level with the euro and sterling tranches now being talked five basis points tighter, said market sources. The triple-B rated Class C notes were revised to Libor 60 to 65 basis points -- expected at 60 basis points. Markets sources said that underwriters are testing the tight end of guidance for the senior tranches as well.

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